⛽️New Chapter 11 Filing - EPIC Companies LLC⛽️

EPIC Companies LLC

August 26, 2019

Another day, another oil-related bankruptcy filing. Houston-based Epic Companies LLC and six affiliated companies filed for chapter 11 on August 26, 2019 in the Southern District of Texas (Judge Jones presiding) to effectuate a sale to its pre-petition and post-petition lender, White Oak Global Advisors LLC.* White Oak intends to credit bid $48.9mm and assume $40mm of the debtors’ debt. It then hopes to flip the assets — that’s right, flip the assets — to a secondary buyer, Alliance Energy Services LLC, for $40mm and the assumption of $35mm of debt. The debtors hope to consummate the transaction within 65 days. This is bankruptcy today folks: super speedy cases tied to aggressive DIP milestones. Why? In large part, because bankruptcy is too frikken inefficient and expensive to go about a sale transaction otherwise. This is why it’s imperative to have a robust pre-petition marketing process. Here, there’s the added element of the secondary sale.

Formed in Q1 2018, the debtors service the oil and gas industry through heavy lift, diving and marine, specialty cutting and well-plugging and abandonment services. Said another way, these guys work with oil and gas companies at the end of the well lifecycle.

Speaking of the end of lifecycles, the company has been in trouble from the get-go. After spending a year acquiring assets, the debtors already had to start divesting by April of 2019. White Oak foreclosed on equity interests in three entities in July 2019. The company still owns three heavy lift and diving vessels, other equipment, IP, and real property. They owe $106.9mm under a senior loan** and $124.8mm under a junior loan. Unsecured trade debt is $30mm. Other liabilities include litigations against the debtors’ vessels.

Why is this company in bankruptcy? They’re very to the point:

Like many in their industry, the downturn in oil and natural gas prices and other industry-related challenges negatively impacted the Debtors' liquidity position.

Consequently, White Oak called a default and has been driving the bus ever since: in July, White Oak informed management that it was done sinking money into this morass. Five days later, the debtors terminated 400 employees. 28 employees remain. Sadly, their future is decidedly more uncertain today than it was even two months ago.

*Prior to the voluntary filing, one of the debtors was involuntaried in Louisiana.

**Once White Oak exercised remedies, it then restated the debtors’ senior debt into three separate facilities. Acqua Liana, as junior lender, followed suit vis-a-vis the junior loan.

  • Jurisdiction: S.D. of Texas (Judge Jones)

  • Capital Structure: see above.

  • Professionals:

    • Legal: Porter Hedges LLP (John Higgins, M. Shane Johnson, Genevieve Graham)

    • Financial Advisor/CRO: S3 Advisors LLC (“G2”) (Jeffrey Varsalone)

    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on the link above for free docket access)

  • Other Parties in Interest:

    • Prepetition Senior Loan Lender & Postpetition Lender & Stalking Horse Purchaser: White Oak Global Advisors LLC

    • Prepetition Junior Loan Lender: Acqua Liana Capital Partners LLC

⛽️New Chapter 11 Filing - KP Engineering LP⛽️

KP Engineering LP

August 23, 2019

Texas-based KP Engineering LP and an affiliated debtor filed for bankruptcy in the Southern District of Texas. The debtors are “in the business of designing and executing customized engineering, procurement, and construction (“EPC”) projects for the refining, midstream, and chemical industries.” Said another way, the debtors contract to serve as a general contractor for their clients, functioning as project manager overseeing subcontractors during the development and completion of facilities for clients. One thing about this kind of business: particularly when you have over $68mm of debt, your contracts have to be economical and your clients have to like you. It seems that the debtors fail on both counts.

In January 2017, the debtors entered into an EPC contract with Targa Pipeline Mid-Continent WestTex LLC (a subsidiary of Targa Resources Corp. ($TRGP)) to design, procure equipment for and construct a 200mm cubic feet per day gas cryogenic processing plant. The plant is complete and now operational. Unfortunately for the debtors, however, they “sustained a significant economic loss.” Solid job, guys! At least it helped them get additional work from Targa…

…that Targa then fired them from and are now suing over.

In August 2017, the debtors entered into an EPC for a second plant with Targa but prior to full completion, Targa allegedly stopped paying which had the cascading effect of limiting the debtors’ ability to pay its subcontractors. Earlier this month, Targa terminated the EPC agreement and booted the debtors from the job site. Now subcontractors and Targa are suing the debtors for, among other things, lack of payment. The debtors indicate that the litigation forced the debtors into bankruptcy.

So, what now? It’s unclear. The debtors have a $4mm DIP commitment but the papers don’t make it clear where the debtors intend to go from here. Curiously, the debtors provide this hanging explanation for why they’re in chapter 11:

The Debtors face a number of risks to their business. The landscape surrounding the EPC contractor market is competitive, highly technical, and fast-changing. The Debtors face risks related to a changing environment in which technological advancement is altering their core business. An inability to innovate could be detrimental to the future of the Debtors. However, the Debtors’ present innovation has been the cornerstone of its success to date.

We get some of this. We suppose the first plant was uneconomical because fierce competition affected bidding. But what is the rest of this trying to say? What tech advancement are the debtors referring to? What innovation? Are there competitors founded by Jeff Bezos? We mean, WTF? It’s almost like management here forgot for a second that the debtors aren’t a public company and, therefore, there’s no need to throw out buzzwords.

Whatever. Good luck with bankruptcy, you crazy cowboys.

  • Jurisdiction: S.D. of Texas (Judge Jones)

  • Capital Structure: $68mm of total debt

  • Professionals:

    • Legal: Hunton Andrews Kurth LLP (Jennifer Wuebker, Greg Hesse, Edward Clarkson, Justin Paget) & Okin Adams LLP (Christopher Adams)

    • Financial Advisor/CRO: Claro Group LLC (Douglas Brickley)

    • Claims Agent: Omni Management Group (*click on the link above for free docket access)

  • Other Parties in Interest:

    • Prepetition Lender: Texas Capital Bank

    • DIP Lender ($4mm): BTS Enterprises Inc.

⛽️New Chapter 11 Bankruptcy Filing - Shale Support Global Holdings LLC⛽️

Shale Support Global Holdings LLC

July 11, 2019

When privately-owned companies that most people have never heard of file for bankruptcy, it naturally raises the following logical question: with oil and gas once again imploding, how many off-the-run companies are going to wind their way into bankruptcy court? 🤔 We reckon quite a number.

Shale Support Global Holdings LLC, a private Louisiana-based proppant supplier to oilfield servicing companies that, in turn, service E&P companies, filed for bankruptcy in the Southern District of Texas. The company and 7 affiliated debtors (the “Debtors”) have little by way of assets ($3.15mm) and much more by way of debt ($127.8mm). MOR Bison LLC and BBC Holding LLC own 69.24% and 29.67% of the company, respectively.

The company started in 2014 to solve the problem of expensive logistics costs emanating out of the transport of sand to frac sites. The company sought to vertically integrate the ownership of sand mines with, among other things, a drying facility and a transload facility; its mines are in Mississippi. Given what has occurred in oil and gas country since 2014, it seems abundantly clear that the timing here was just a bit off. “How off,” you ask? Per the Debtors:

Demand for frac sand is significantly influenced by the level of well completions by E&P and OFS companies, which depends largely on the current and anticipated profitability of developing oil and natural gas reserves. As such, Shale Support’s business is highly correlated with well completions, which is, in-turn, is dependent on both commodity prices and producers’ ability to deliver oil to the market. Over the past five years, commodity prices have been highly volatile resulting in an unpredictable demand curve and a significant amount of OFS and E&P bankruptcies. Compounding these demand issues, Shale Support operates in a highly-competitive industry that has seen a dramatic increase in supply. This new supply has come from basin-specific regional producers (that have dramatically lower logistic costs) as well as larger, often better-capitalized, competitors. Regional suppliers and Shale Support’s larger competitors are both in a position to exert significant, downward pressure on pricing for proppants.

Said another way, as off as humanly possible. With a supply/demand imbalance in 2H ‘18, the company saw revenue fall over 40% in 2018. 😬 This was in large part due to the fact that, despite falling proppants prices, the Debtors are locked in to fixed cost contracts with railcar transport providers. With this mix plus over $127mm in outstanding debt obligations, liquidity became an issue.

For over a year now, the Debtors have been in a state of perpetual marketing. Piper Jaffrey & Co., the Debtors’ banker, could not, however, locate a buyer. In the midst of discussions with potential strategic and financial buyers, the price of frac sand continued to fall. Per the Debtors:

Unsurprisingly, no party submitted an indicative expression of interest, a non-binding offer or a valuation of Shale Support. The stated justification from these parties centered around market conditions, location of the reserves, quality of sand, availability of buyer cash, and consistent underperformance of business relative to forecasts.

Efforts to refinance the debt were equally unsuccessful given the declining asset value upon which a new loan would be based. Ultimately, the Debtors defaulted under their prepetition term loan agreement and, over the course of multiple months of waivers, negotiated with their lenders with the hope of “building consensus around a de-leveraging transaction.” Spoiler alert: there’s no prepackaged plan on file here nor is there a bid procedures motion accompanied by a stalking horse asset purchase agreement so suffice it to say that whatever consensus there might be is limited to the commitment of a $16.6mm DIP credit facility. And that forces the issue: under the DIP milestones, the Debtors must confirm a plan of reorganization within 98 days. Will the lenders equitize? Given the astounding job the first day papers do of making the assets seem attractive, is there a chance in hell a buyer emerges? Stay tuned.

  • Jurisdiction: S.D. of Texas (Judge Jones)

  • Capital Structure: $116mm ‘21 10% cash/12% PIK Term Loan (including interest, etc.), $11.6mm ‘21 ABL (Siena)

  • Professionals:

    • Legal: Greenberg Traurig LLP (Shari Heyen, Karl Burrer, David Eastlake, Eric Howe)

    • Financial Advisor/CRO: Alvarez & Marsal LLC (Gary Barton)

    • Investment Banker: Piper Jaffray & Co. (Richard Shinder)

    • Claims Agent: Donlin Recano & Company Inc. (*click on the link above for free docket access)

  • Other Parties in Interest:

    • Prepetition Term Loan & DIP Agent ($16.6mm): BSP Agency LLC (DIP Lenders: Providence Debt Fund III LP, Benefit Street Debt Fund IV LP, and Benefit Street Partners SMA LM LP).

      • Legal: Baker Botts LLP (Emanuel Grillo)

    • Prepetition Revolving Lender: Siena Lending Group LLC

      • Legal: Thompson Coburn LLP (David Warfield, Victor A. Des Laurier)

🚁New Chapter 11 Bankruptcy Filing - Bristow Group Inc.🚁

Bristow Group Inc.

May 11, 2019

Nothing like being late to the party. Following in the footsteps of fellow helicopter transportation companies Erickson Inc., CHC Group, Waypoint Leasing* and PHI Inc., Bristow Group Inc. ($BRS) and its eight affiliated debtors are the latest in the space to find their way into bankruptcy court. The company enters bankruptcy with a restructuring support agreement and a $75mm DIP financing commitment with and from its senior secured noteholders.

While each of the aforementioned companies is in the helicopter transportation space, they don’t all do exactly the same business. PHI, for instance, has a fairly large — and some might say, attractive — medical services business. Bristow, on the other hand, provides industrial aviation and charter services primarily to offshore energy companies in Europe, Africa, the Americas and the Asian Pacific; it also provides search and rescue services for governmental agencies, in addition to the oil and gas industry. Like the other companies, though: it is not immune to (a) the oil and gas downturn and (b) an over-levered balance sheet.

At the time of this writing, the debtors’ chapter 11 filing wasn’t complete and so details are scant. What we do know, however, is that the company does have a restructuring support agreement executed with “the overwhelming majority” of senior secured noteholders and a $75mm DIP commitment.

*Waypoint Leasing is listed as the 14th largest creditor, owed nearly $104k. Sheesh. These businesses can’t catch a break.

  • Jurisdiction: S.D. of Texas (Judge Jones)

  • Capital Structure:

  • Professionals:

    • Legal: Baker Botts LLP (James Prince, Omar Alaniz, Ian Roberts, Kevin Chiu, Emanuel Grillo, Chris Newcomb)

    • Financial Advisor: Alvarez & Marsal LLC

    • Investment Banker: Houlihan Lokey Capital Inc.

    • Claims Agent: Prime Clerk LLC (*click on the link above for free docket access)

  • Other Parties in Interest:

    • ABL Facility Agent: Barclays Bank PLC

    • 2019 Term Loan Agent: Ankura Trust Company LLC

    • Indenture Trustee for the 8.75% ‘23 Senior Secured Notes: U.S. Bank NA

    • Indenture Trustee for the 6.25% ‘22 Senior Notes and 4.5% ‘23 Convertible Senior Notes: Wilmington Trust NA

    • Ad Hoc Group of Secured Notes and Term Lenders (Blackrock Financial Management Inc., DW Partners LP, Highbridge Capital Management LLC, Oak Hill Advisors LP, Whitebox Advisors LLC)

      • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Natasha Tsiouris) & (local) Haynes and Boone LLP (Charles Beckham, Kelli Norfleet, Martha Wyrick)

    • Ad Hoc Group fo Unsecured Noteholders

      • Legal: Kramer Levin Naftalis & Frankel LLP

⛽️New Chapter 11 Filing - Vanguard Natural Resources Inc.⛽️

Vanguard Natural Resources Inc.

March 31, 2019

It’s raining SCARLET 22s! Freefall!! We still STILL have a feasibility problem!!!

Vanguard Natural Resources Inc. ($VNRR) and affiliated debtors find themselves in bankruptcy court again — the second time in nearly exactly two years (its predecessor confirmed a plan of reorganization in July 2017). And they do so in crash and burn fashion: while discussions have been happening over the last several weeks with various constituencies within the company’s capital structure, the company has no deal agreed to — merely the outlines of a restructuring term sheet. This is curious given that, under the company’s proposed DIP credit facility ($130mm, of which $65mm is new money), the company has a mere 30 days from the petition date to file a plan of reorganization and must emerge from chapter 11 within 120 days. Send hopes and prayers to the Kirkland attorneys working on this one over the next few weeks.

The debtors are an oil and natural gas company with production and development activity in the Rocky Mountain, Mid-Continent, Gulf Coast and West Texas regions of the United States; they operate in eight states across nine geologic basins. They are a remnant of the first bankruptcy which saw the predecessor entity shed $850mm of debt and wipe out the existing equity. The current capital structure looks like this:

Screen Shot 2019-04-01 at 1.26.16 PM.png

The second lien noteholders include Fir Tree Capital Management LP and York Capital Management Global Advisors LLC. And the company’s equity holders are:

Source: Chapter 11 Petition

Source: Chapter 11 Petition

This is another pretty cut and dry oil and gas bankruptcy given where oil and natural gas prices are. Many investors who took ownership of distressed E&P companies circa 2015-2017 were playing an option on oil and gas trading levels. That option is clearly out of the money.

Interestingly, that option was underwritten, in part, on the company’s projections. And, so, this statement by the company’s now-CEO was particularly intriguing to us and fits nicely within our recent general theme of inquiring as to whether the industry has a feasibility problem (see Paragon Offshore here, Gymboree here, and Payless here):

I understand that the Vanguard I Plan was predicated on various assumptions that ultimately did not materialize. As discussed further herein, it is my understanding that these may have included certain assumptions about: (a) commodity prices and basin differentials; (b) the pace and volume of divestments and the existence of valuable undeveloped resources to be sold; and (c) the expected returns on a number of capital investments pursued by Vanguard upon emergence—many of which have failed to come to full fruition and have challenged the Debtors’ liquidity over the last 18 months.

Former management, meet a big bad bus. You’ve just been thrown under it.

Under bus.gif

In fact, as if saying it wasn’t enough, the new CEO spared PETITION the trouble of having to dive into the 2017 filings to see just how badly these guys botched their liquidity projections:

Source: First Day Declaration

Source: First Day Declaration

The following compounded matters: (a) mismanagement of the company’s hedge book, (b) borrowing base redeterminations, (c) refi roadshows met with “tepid” interest, (d) a series of asset sales that failed to live up to expectations — both in terms of time to completion and proceeds, and (e) capital investments that “delivered lower economic returns than expected.” It’s almost as if distressed investors who sit on boards of directors and hire their own operators have absolutely no effing clue how to run an oil and gas company. Who knew?

And so the company came dangerously close to tripping a series of covenants. That’s when the company brought in Kirkland & Ellis LLP and Evercore Group LLC and re-engaged Opportune LLP to help the company. The various advisors engaged in a number of processes that would have provided the company with crucial liquidity — including new financing, bank facility amendments and various discreet asset sales. But all prospective parties quickly realized that the assets…well…for lack of a better description…kinda, like, suck.

And so nothing could get done. Well, other than the company obtaining a commitment for $130mm of DIP financing to fund the cases (of which only $65mm is new money). What happens from here will be interesting to watch. Suffice it to say, distressed-investors-cum-oil-and-gas-owners are learning a ROUGH lesson.

And, once again, we have to ask whether company projections ought to get a bit more scrutiny than they have to date.

  • Jurisdiction: S.D. of Texas (Judge Jones)

  • Capital Structure: $677.7mm RCF and $123.4mm TL (Citibank NA), $80.7mm second lien notes (Delaware Trust Company)

  • Professionals:

    • Legal: Kirkland & Ellis LLP (James Sprayragen, Christopher Marcus, Brian Schartz, Aparna Yenamandra, Richard Howell, Yates French, Kent Hayden, Timothy Bow, James Fedell, Allyson Smith Weinhouse) & (local) Blank Rome LLP (James Grogan, Philip Guffy)

    • Board of Directors: Randall Albert, Patrick Bartels Jr., W. Greg Dunlevy, Joseph Hurliman Jr., Andrew Schultz, R. Robert Sloan, L. Spencer Wells

    • Financial Advisor: Opportune LLP

    • Investment Banker: Evercore Group LLC

    • Claims Agent: Prime Clerk LLC (*click on the link above for free docket access)

  • Other Parties in Interest:

    • DIP Agent ($130mm, $65mm New Money): Citibank NA

      • Legal: Latham & Watkins LLP (Mitchell Seider, Annemarie Reilly, Adam Malatesta) & (local) Hunton Andrews Kurth LLP (Timothy Davidson II, Joseph Rovira)

    • Ad Hoc Group of First Lien Lenders

      • Legal: Brown Rudnick LLP (Robert Stark, Steven Pohl, Justin Cunningham, Alexander Fraser) & (local) Quinn Emanuel Urquhart & Sullivan LLP (Patricia Tomasco)

    • Second Lien Ad Hoc Group (Fir Tree Capital Management LP, York Capital Management Global Advisors LLC)

      • Legal: Davis Polk & Wardwell LLP (Brian Resnick, Benjamin Schak) & (local) Porter Hedges LLP (John Higgins, Eric English, M. Shane Johnson)

    • Official Committee of Unsecured Creditors

      • Legal: Locke Lorde LLP (Philip Eisenberg)

      • Restructuring Advisor: Parkman Whaling LLC (Thomas B. Hensley Jr.)

      • Financial Advisor: The Claro Group LLC (Douglas Brickley)

Updated 5/10 at 12:25pm (#48)

New Chapter 11 Bankruptcy Filing - NRG REMA LLC

NRG REMA LLC

October 16, 2018

NRG REMA LLC, an indirect subsidiary of bankruptcy veteran GenOn Energy Inc., has filed for bankruptcy to effectuate a prepackaged plan of reorganization supported by “REMA, the independent directors of GenOn (who are advised by independent advisors), the independent directors of REMA (who are advised by independent advisors), more than 90% of holders of those certain Series C Pass-Through Trust Certificates due 2026, Public Service Enterprise Group and the steering committee of GenOn noteholders.”

We don’t really have much to add so we’ll leave it at that.

  • Jurisdiction: S.D. of Texas (Judge Jones)

  • Company Professionals:

    • Legal: Kirkland & Ellis LLP (James Sprayragen, David Seligman, Steven Serajeddini, W. Benjamin Winter, AnnElyse Scarlett Gibbons) & (local) Zack A Clement PLLC

    • Legal to Governance Committee of BOD: Akin Gump Strauss Hauer & Feld LLP

    • Financial Advisor: Alvarez & Marsal LLC

    • Investment Banker: Rothschild

    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)

  • Other Parties in Interest:

    • Lease Indenture Trustees and Pass Through Trustee

      • Legal: Hogan Lovells US LLP (Robert Ripin, Alex Sher)

    • Consenting PTC Holders

      • Legal: Paul Weiss Rifkind Garrison & Wharton LLP (Andrew Rosenberg, Elizabeth McColm, Alexander Woolverton)

New Chapter 22 Filing - Geokinetics Inc.

Geokinetics Inc.

6/25/18

Just when we thought companies had mysteriously figured out how to stay out of bankruptcy court, alas, a filing!

And just when we thought oil and gas-related distress had ridden off into the proverbial Texan sunset, in walks Houston-based geophysical services provider Geokinetics Inc. into the Southern District of Texas with a plan to sell substantially all of its assets to (one-time bankruptcy candidate) SAE Exploration Inc. for $20mm. Looks like the oil and gas downturn still has some appetite for prey. And it must be tasty prey: this is the second time in four years that this company is in bankruptcy. #Scarlet22. Indeed, this company is so good at bankruptcy that, the first time, it emerged from chapter 11 a full year before it even confirmed its plan!! From paragraph 24 of the First Day Declaration:

"On March 10, 2014, GOK and certain affiliated subsidiaries confirmed a prepackaged chapter 11 plan of reorganization in the District of Delaware. Pursuant to the Plan, GOK equitized over $300 million of debt and paid off its revolving credit facility. On May 10, 2013, GOK and certain affiliated subsidiaries emerged from chapter 11."

And we thought Westworld had mind-bending timelines. Whoops. 

The company blames the prolonged downturn and certain discreet "operational difficulties" that resulted in uncollectable receivables for its bankruptcy. Wanting to jump ship as the iceberg approached, Wells Fargo sought to minimize its exposure but the company and its bankers, Moelis, weren't able to find a suitable secured loan facility to refinance its revolving loan. So Moelis toggled to "strategic alternatives" mode which, seemingly, included dumping this turd on unsuspecting public equity investors as the company -- under the guidance of Fried Frank Harris Shriver & Jacobson -- filed a confidential S-1 under the JOBS Act. Sounds a lot like Domo Inc. Or Tintri Inc., for that matter. #HailMary

Obviously the company didn't IPO. Instead, it continued to bleed cash. Ascribe Capital replaced Wells Fargo and funded bridge loans for some time until they were no longer willing to perform triage. The company and its advisors stepped on the gas, lined up the stalking horse bidder, and secured interest in a $15mm DIP credit facility -- from Whitebox Advisors and Highbridge Capital, two funds that are stakeholders in the stalking horse bidder -- and filed for bankruptcy. The proceeds of the DIP will be used, in part, to pay off Ascribe's bridge loans. 

Meanwhile, remember that IPO? It seems the company thought that that was a gigantic waste of time: among the top creditors are Fried Frank Harris Shriver & Jacobson LLP and Moelis & Co. ($MO). Savage. 

  • Jurisdiction: S.D of Texas (Judge Jones)
  • Capital Structure: $15.6mm Term Loan A (Ascribe Capital, Wilmington Trust), $6.8mm RCF (Ascribe Capital, Wilmington Trust)
  • Company Professionals:
    • Legal: Porter & Hedges LLP (John Higgins, Joshua Wolfshohl, Aaron Power)
    • Financial Advisor: FTI Consulting Inc. 
    • Investment Banker: Moelis & Co. 
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Ascribe Investments LLC
      • Legal: Simpson Thacher & Bartlett LLP (Michael Torkin, Bryce Friedman, Randi Lynn Veenstra, Megan Tweed, Sandeep Qusba, Yun Joo Lim) & (local) Haynes and Boone LLP (Charles Beckham Jr., Martha Wyrick)
    • SAExploration Inc.
      • Legal: Akin Gump Strauss Hauer & Feld LLP (Sarah Link Schultz, Eric Seitz)
    • DIP Lenders: Whitebox Advisors LLC, Highbridge Capital Management LLC
      • Legal: Brown Rudnick LLP (Andreas Andromalos, Steven Levine, Jeffrey Jonas, Robert Stark, Kimberly Cohen)

Updated 6/26 6:54 PT

New Chapter 11 Filing - Fieldwood Energy LLC

Fieldwood Energy LLC

  • 2/15/18 Recap: Riverstone Holdings (12% owned by Goldman Sachs) attempted to keep Fieldwood Energy LLC out of bankruptcy back in the beginning of the oil & gas collapse but, alas, it appears the capital structure was too hefty to manage in a continued depressed oil and gas market. Today, the company filed a prepackaged plan of reorganization to slice its debt virtually in half (from $3.26b to $1.6b), implement a $525mm rights offering (use of proceeds = purchase Noble Energy's Gulf of Mexico assets), and secure a $60mm DIP credit facility. Existing RBL lenders will be paid in cash in full; first lien lenders will receive a $1.14b FILO TL and cash; holders of the prepetition FILO facility will receive a share of $518mm second lien term loan and cash; and the second lien lenders and Riverstone will receive 20.25% of the new equity plus rights to purchase the remainder via the rights offering. Translation: Riverstone will still own a significant percentage of this company. More to come...
  • Jurisdiction: S.D. of Texas (Judge Jones)
  • Capital Structure: $3.26b debt     
  • Company Professionals:
    • Legal: Weil Gotshal & Manges LLP (Stephen Karotkin, Ray Schrock, Matthew Barr, Alfredo Perez, Jessica Liou, Daniel Gwen, Patrick Steel)
    • Financial Advisor: Opportune LLP
    • Investment Banker: Evercore Group LLC (David Ying)
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Prepetition Reserves-Based Lending Facility Agent: Citibank NA
      • Legal: Willkie Farr & Gallagher LLP (Jennifer Hardy, Ana Alfonso, Debra McElligott)
    • Ad Hoc Group of First Lien Term Loan Lenders
      • Legal: O'Melveny & Myers LLP (George Davis, David Johnson, Evie Whiting and Daniel Shamah) & (local) Jackson Walker LLP (Patricia Tomasco, Matthew Cavenaugh, Kristhy Peguero, Jennifer Wertz)
    • Prepetition Agent of the Second Lien Term Loan Facility: Cortland Capital Market Services LLC
      • Legal: Davis Polk & Wardwell LLP (Damian S. Schaible, Darren S. Klein, Natasha Tsiouris) & (local) Haynes and Boone LLP (Henry Flores, Kenric Kattner, Kourtney Lyda)
    • Noble Energy, Inc.
      • Legal: Bracewell LLP (William A. Wood III) 
    • Apache Corporation
      • Legal: Andrews Kurth Kenyon LLP (Robin Russell)
    • PE Sponsor
      • Riverstone V FW Holdings Sub LLC
        • Legal: Vinson & Elkins LLP (David Meyer, Jessica Peet)

Updated 4/2/18 (case confirmed)

New Chapter 11 Filing - Seadrill Ltd.

Seadrill Ltd.

  • 9/12/17 Recap: Cash rich offshore oil and gas extraction company with global reach filed a prearranged bankruptcy to effectuate a balance sheet restructuring because...well...it was over-levered AF. The company purports to have a deal with its major creditors with secured creditors kicking the can down the road, and $2.3b worth of unsecured bondholders and other unsecured claims converting into approximately 15% of the post-reorg equity (with participation rights in the new secured notes and equity noted below). The company will get $1.06b of new capital by combination of new secured notes ($860mm) and equity ($200mm). Holders of $NADL stock will get a big fat donut.  
  • Jurisdiction: S.D. of Texas (Judge David Jones)
  • Capital Structure: A. Lot. Of. Debt. Like $5.7mm of bank debt and $2.3mm of unsecured bonds.
First Day Declaration.

First Day Declaration.

 

  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (Jayme Sprayragen, Anup Sathy, Ross Kwasteniet, Adam Paul, Brian Schartz, Anna Rotman, Jeffrey Zeiger, Anthony Grossi, Spencer Winters) & (local) Jackson Walker LLP (Patricia Tomasco, Matthew Cavenaugh, Rachel Biblo Block)
    • Restructuring Advisor: Alvarez & Marsal LLC (Jeffrey Stegenga, Ed Mosley)
    • Financial Advisor: Houlihan Lokey (David Hilty, Gavin Kagan, Dimitar Voukadinov, Drew Talarico, David Wang, Brian Keenan, Varun Desai, Daniel McManus) & Morgan Stanley
    • Claims Agent: Prime Clerk LLC (*click on company name for docket)
  • Other Parties in Interest:
    • Conflicts Committee of Board of Directors of North Atlantic Drilling Limited and to the Conflicts Committee of the Board of Directors of Sevan Drilling Limited
      • Legal: Willkie Farr & Gallagher LLP (Jennifer Hardy, Andrew Mordkoff, Derek Osei-Bonsu)
      • Financial Advisor: Baker Tilly Virchow Krause LLP (Susan Seabury)
    • Conflicts Committee of Seadrill Partners LLC
      • Legal: Orrick Herrington & Sutcliffe LLP (Katherine Treistman, Raniero D'Aversa, Laura Metzger, Debra Felder)
    • New Money: Hemen Holding Ltd., Centerbridge Partners LP
      • Legal: Cadwalader Wickersham & Taft LLP (Greg Petrick, Yushan Ng, Nicholas Vislocky) & Fried Frank Harris Shriver & Jacobson LLP (Brad Scheler, Jennifer Rodburg, Andrew Minear) & (local) Dykema Cox Smith (Deborah Williamson, Patrick Huffstickler, Aaron Kaufman)
    • Consenting Lender Group
      • Legal: White & Case LLP (Scott Greissman, Philip Abelson, Andrew Katz) & (local) Andrews Kurth Kenyon LLP (Robin Russell, Timothy A. Davidson II, Joseph Rovira)
    • Aristeia Capital L.L.C., GLG Partners LP, Saba Capital Management LP and Whitebox Advisors LLC
      • Legal: Akin Gump Strauss Hauer & Feld LLP (Philip Dublin, Ira Dizengoff, David Staber, Abid Qureshi, Sara Brauner)
    • ARCM Master Fund III, Ltd.
      • Legal: Paul, Weiss, Rifkind, Wharton & Garrison, LLP (Elizabeth McColm, Andrew Rosenberg, Catherine Goodall)
    • Indenture Trustee: Deutsche Bank Trust Company Americas
      • Legal: Morgan, Lewis & Bockius LLP (Chad Steward, Glenn Siegel, Crystal Axelrod, Rachel Jaffe Mauceri)
    • Daewoo Shipbuilding & Marine Engineering
      • Legal: Pachulski Stang Ziehl & Jones LLP (Shirley Cho, Bradford Sandler, Steven Golden)
    • Samsung Heavy Industries Co., Ltd.,
      • Legal: Hogan Lovells US LLP (Robin E. Keller, Ronald J. Silverman, Christopher R. Bryant, Michael Shane Johnson) & (local) 
    • Official Committee of Unsecured Creditors (Nordic Trustee AS, Deutsche Bank Trust Company Americas, Computershare Trust Company NA, Daewoo Shipbuilding & Marine Engineering Co. Ltd., Samsung Heavy Industries Co. Ltd., Pentagon Freight Services Inc., Louisiana Machinery Co. LLC)
      • Legal: Kramer Levin Naftalis & Frankel LLP (Thomas Moers Mayer, Douglas Mannal, Jennifer Sharret) & (local) Cole Schotz PC (Michael Warner, Benjamin Wallen)

Updated 10/5/17 12:03 pm CT

New Chapter 11 Filing - GenOn Energy Inc.

GenOn Energy, Inc.

  • 6/14/17 Recap: NRG Energy Inc. ("$NRG") owned deregulated wholesale power generation corporation and operator of 32 power plants in 8 states (Mid-Atlantic & California) filed a bankruptcy case with a restructuring support agreement agreed to by NRG and holders of 90% of the funded debt. The plan for the restructuring is to delever the company by $1b with the holders of the unsecured senior notes obtaining equity in the reorganized entity from NRG (and the right to participation in rights offering for $900mm in exit financing). This is another in a line of recent power cases including Panda Temple Power, Homer City Generation LP, Illinois Power Generating Co., La Paloma Generating Company LLC. And it probably won't be the last. The company cited the following causes - in addition to its over-levered capital structure - for the bankruptcy filing: (i) flat demand for power over the past five years, (ii) excess capacity (in part due to insufficient power plant retirements), (iii) lower cost structure for competitors, and (iv) significantly depressed natural gas prices. "This combination has caused energy and capacity prices to fall. So has the Debtors' profitability as a result." In the mid-Atlantic, electricity cleared $100 per megawatt hour in early 2014 and now the price hovers around $30 per megawatt hour. And nat gas isn't predicted to recover to industry price highs at least until 2030. So, looks like the merger that created this combined mid-Atlantic/California entity and levered this sucker up to the sky was a bit ill-timed, hey? 
  • Jurisdiction: S.D. of Texas (Judge Jones)
  • Capital Structure: $ '18 RCF (NRG Energy Inc. & U.S. Bank NA), $691mm '17 7.875% Senior Notes & $649mm '18 9.50% Senior Notes & $490mm '20 9.875% Senior Notes (Wilmington Trust Company NA), $366mm '21 8.50% Senior Notes & $329mm '31 9.125% Senior Notes (Wilmington Savings Fund Socieity FSB)    
  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (James Sprayragen, David Seligman, Steven Serajeddini, W. Benjamin Winger, Christopher Hayes, AnnElyse Scarlett Gibbons) & (local) Zack A. Clement PLLC (Zach Clement)
    • Financial Advisor: McKinsey Recovery & Transformation Services U.S., LLC (Kevin Carmody, Tanner MacDiarmid, Sam Jacobs)
    • Investment Banker: Rothschild & Co. (Todd Snyder)
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Ad Hoc Committee of GenOn Note and GAG Notes
      • Legal: Ropes & Gray LLP (Keith Woffard, Stephen Moeller-Sally, Marc Roitman, Meredith Parkinson) & (local) Porter Hedges LLP (John Higgins, Joshua Wolfshohl, Rachel Thompson)
    • Ad Hoc Steering Committee of GAG Notes
      • Legal: Quinn Emanuel Urquhart & Sullivan LLP (David Gerger, Emily Smith, Benjamin Firestone, Daniel Holzman)
    • NRG Energy Inc.
      • Legal: Baker Botts LLP (Emanuel Grillo, Ian Roberts, Christopher Newcomb)
    • Wilmington Trust Company
      • Legal: Covington & Burling LLP (Ronald Hewitt, Dianne Coffino)
    • Issuing Bank: Citibank NA
      • Legal: Latham & Watkins LLP (Richard Levy, David Hammerman)

Updated 7/11/17 6:47 pm CT